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WASHINGTON, DC- Lisa Woll, CEO of US SIF: The Forum for Sustainable and Responsible Investment, today hailed the Securities and Exchange Commission (SEC) for its proposed rule on the disclosure of executive compensation. Under the proposal, as required under Section 953(b) of the Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank Act), companies would be mandated to disclose:
· The median of the annual total compensation of all its employees except the CEO.
· The annual total compensation of its CEO.
· The ratio of the two amounts.
Woll stated that “We welcome the proposal of this much needed and long-delayed rule on executive compensation and thank Commissioners White, Aguilar and Stein for supporting this proposal and the SEC staff for their work to move this issue forward. Executive compensation disclosure was one of the priorities of sustainable and responsible investors during consideration of the Dodd-Frank Act. Disclosure of information on executive compensation is a key measure to ensure sound corporate governance and will provide much-needed material information to shareholders and important information to other stakeholders. Shareholders and other stakeholders must know how their company’s internal pay comparisons could impact employee morale, productivity, planning and a range of labor related issues. We urge investors to provide their comments to the SEC within the 60-day public comment on this rule.”
Timothy Smith, Senior Vice President of Walden Asset Management and Chair of the US SIF Policy Committee, stated that “One of the distinct benefits for investors of the new rule is the ability to track trends in pay in a company. Until now there has been no vehicle to compare the pay of a CEO to employees. Investors who evaluate CEO pay packages also watch the pay comparisons between the CEO and other top executives such as the CFO and COO to ensure the ratio is not out of skew. This information will provide yet another measure for investors and a company’s Board Compensation Committee to assess if top executives’ pay packages are deserved and reasonable. This is a timely rule to help investors assess pay packages.”